Is It Finally The End Of The Bear Market?
I am probably not the first, and definitely not the last, to write about the recent surge in stock markets worldwide. It has been so long since investors have had a strong rally like that to play with. Now that markets have rallied almost 10% worldwide in one week; one question remains: Is it safe to invest in stocks again?
For many months now, investors have been trapped in a fake bear market rally that proved to be short lived. Markets worldwide have continued to hit long-time lows in February and March ’09. The strong rebound this past week has surprised quite a few people and it was clear that short sellers had to cover their positions after Tuesday’s rally. Many are still skeptical stocks are a good play right now, however, this time they could be different for few reasons:
- Banks sent positive signals with Citigroup, JP Morgan and Bank of America announcing that they all made a profit in January and February. It is definitely a sign of relief for investors as rumors of bankruptcy and nationalization have persisted in markets recently.
- Economic indicators are turning positive for the first time in many months (see graph from the WSJ below). Previously, a market rebound typically occurred while economic data was still in a free fall. The recent turn around in economic data could indicate support for a strong stock market rally.
- Many indices are hitting important long term support level which could also bring more buyers in the market (CAC40 is right on its 2003 support level …)
There is exceptionally strong evidence that the recent announcement by three of the biggest banks in the US (that all three made profits in January and February), at a time when almost everyone gave up on them, was the trigger for the rally. It is still unclear and too soon to really say that the worst is over for these banks, but we can now admit that the FED actions the past few months have been a success and that it clears the sky a bit.
Both the CAC and the Dow rebounded on strong support levels and are expected to continue their rally for couple more weeks (weekly charts). On the other hand, the Nikkei 225 is still below a long term support level of 2003 but rebounded strongly when the index retested its last October low. However, recently the correlation between the Dow and the Nikkei225 has been 0.98, which makes me believe that any rebound in the US stock market will also be felt in Japan.
I have a feeling we are going to enjoy watching CNBC or Bloomberg TV over the next couple weeks and it will certainly be an enjoyable change of pace to actually look forward to reading the Wall Street Journal or the Financial Times.
Disclosure: Emerginvest is an international finance portal, providing analysis and data on 120+ world markets to help individuals find investments from around the world. The author, Chris Harne, does not intend this to be actionable investment advice.
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Filed under: Commentary on World Financial News, Developed Markets, Olivier (Global Markets Analyst), World Analysis
Bernanke announced yesterday that he expects the U.S recession to end by the end of this year or at least tilt the beginning of the next year.Like he said lack of (political) will to resolve the crisis can be fatal.It may be still early days to tell if the bear market has finally ended.The G-20 summit next month will be crucial.
Prije par dana pisali ste o Dray Baltic Index-u .
Jesu li moguča koja (špekulacija) ulaganja , bazirana na ras ili pad ovog indeksa ili je to samo jedan ekonomski pokazatelj:
Hvala na odgovoru .
Prije par dana pisali ste o Dray Baltic Index-u .
Jesu li moguča koja (špekulacija) ulaganja , bazirana na ras ili pad ovog indeksa ili je to samo jedan ekonomski pokazatelj:
Hvala na odgovoru .
Well, looking into politician speaking (Poland - Prime Minister) sometimes I think that new election is much more important than REAL ECONOMIC FACTORS - POLAND wil lNOT adopt EURO before 2015 !!! Politician should now, that deficit is on the level of 3,9 % (forecast 2,7 %) and Maastricht criteria is not possible to catch - and adopt EUR before 2012.
Maybe 2014, 2015 - but NIT in 2012 !!! Also inflation id on the level of close to 6 % - high unemployment (in some cities 30 % ) !!! How politician want to adopt EURO without catching basic EMF criteria???? …it is only politician…so investors should look carefult what they are saying
Nope, not yet. economies around the world is showing all signs of slowing down. I think folks have become weary and tried of all the negativity around. This is just a small sense of optimism. markets will come back to reality.
The economy will improve soon. Japan and China noticed a 2% increase in profits already so it won’t be long.
Раньше я думал иначе, большое спасибо за помощь в этом вопросе.
This is only the beginning, I would say in a month or two, we are really going to feel the hit.
http://blog.taipan-online.de/ there are also good insider news for emerging markets investors
this is just the beginning. So we need to focus and think a strategy to gain more.
I hope we are there…but we’ll see
The market took a big dive last week. Sometimes the reaction of the market doesn’t make sense. Maybe it’s because we have too many day traders that are manipulating the market. It’s best to invest long term in a stable company and wait. I don’t believe in quick rich day trading
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